China’s crypto craving: back-door Binance traders look more important to exchange’s future in wake of US conviction

Binance workarounds allow mainland Chinese traders to sign up by listing their location as Taiwan and affiliates are rewarded for onboarding new users

The world’s largest crypto exchange has sought to distance itself from China, but the sizeable crypto market is more enticing as regulations tighten elsewhere

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Crypto traders in mainland China have long been operating in a legal grey area, and workarounds on Binance are one of the most popular methods of maintaining activity in the market. Illustration: Henry Wong

Published: 12:00pm, 23 Dec 2023

When a Washington Post reporter asked Binance co-founder and then-CEO Zhao Changpeng last year about Chen Guangying – a little-known executive listed as the cryptocurrency exchange’s legal representative in China – the billionaire entrepreneur pushed out a 2,000-word screed on the company blog decrying efforts to paint it as “Chinese”.

According to CZ, as Zhao is commonly known, the reporter was playing into the hands of a competitor that was spreading rumours about Binance to “erode trust in our brand”.

“We don’t have any legal entities in China, and we do not have plans to,” CZ wrote in the piece published on September 1, 2022. “We (and every other offshore exchange) have been designated a criminal entity in China. At the same time, our opposition in the West bends over backward to paint us as a ‘Chinese company’.”

Today, Chen is living in “relative peace” in Europe with little to do with Binance, by CZ’s account. China, though, looks more important than ever to the world’s largest cryptocurrency exchange in the wake of a US$4.3 billion fine and criminal conviction in the US, along with tightening crypto regulations across Asia and Europe.

Binance CEO Changpeng Zhao leaves the US District Court on November 21, 2023, in Seattle. Photo: TNS

Beyond just the US – where both the company and CZ, who stepped down as CEO, pled guilty to charges that included lax anti-money-laundering enforcement – Binance has been forced to defend itself in a variety of markets including the UK, Germany, Japan and Singapore. It withdrew a licence application in Germany this year and revived one in Singapore. Most recently, the Philippines’ Securities and Exchange Commission moved to block the platform.

In China, the exchange has maintained steady business with little-to-no enforcement action in the country, which has banned commercial crypto activity. While claiming not to officially operate in the country, Binance’s sizeable presence in the local industry comes from a widely-used workaround whereby users sign up from within mainland China by listing their location as Taiwan. Beijing claims the self-governing island as part of China.